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NCBA Cattlefax: Hope for Strong 2012 Corn Harvest

3 February 2012, at 11:52pm

ANALYSIS - There is a strong need for a successful 2012 corn harvest, as the US competes on global markets. Meanwhile global demand for ethanol is pushing US corn usage up, said the CattleFax team at the NCBA Convention and Trade Show. Charlotte Johnston, TheCattleSite editor reports.

The range bound for monthly projected stock-to-use levels has been between five to 6.8 per cent since October 2011, and is expected to range from 5.5 per cent to 7.5 per cent in April 2012.

The potential to move US corn stocks-to-use levels above 7.5 per cent has likely been deferred to the 2012-2013 marketing year, where they could reach eight to 11 per cent.

This is obviously dependent on an increase in acres harvested and yields being average or more.

Corn carryover from 2011-2012 is expected to be historically low, which supports the need for a record corn crop in 2012.

However with poultry and cattle production declining, and competitive wheat prices, corn use in feed could fall.

With supply tight, there are concerns that importing countries are looking elsewhere. Both Ukraine and Argentina had strong crops last year, and with soybean trading low it is expected that corn plantings will increase in these countries.

However dry weather in Argentina is a concern for corn stocks.

Already US export commitments in 2012 are lower than they were in 2011, however demand from China is still strong.

Corn is becoming a more and more global market, following in the steps of wheat and cattle.

US projected plantings are looking positive, with 2012 estimated plantings looking at around 94 million acres, two million more than last year.

If these plantings are harvested successfully then it is likely that US corn-to-use levels could reach those higher numbers.

With the above in mind, outlook prices for corn are resisting $6.5/ 6.75 a bushel, and looking likely to be around $5.5/ 5.75 a bushel.

Ethanol

Total ethanol usage increased six per cent in 2011, with exports driving this increase with a 200 per cent increase.

US domestic use of ethanol is approaching 2003 lows, with a three per cent decline in usage in 2011. Contrary to this, demand for exports is increasing offsetting the falls in domestic demand. CattleFax predicts that exports will use 300 million bushels of corn in 2012, creating a name for itself on the global energy markets.

It is expected that this growth will continue for the next few years.

There is a bit of a discrepancy over the amount of corn to be used in US ethanol production in 2012, with the USDA estimating 5 billion bushels, but the US Energy Information Agency coming in with a slightly higher estimate of 5.132 million.

CattleFax believes this to be somewhere in the middle.